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Mortgages – Refinancing vs Purchases

When most people think about the mortgage lending market, they think the mortgage lending is all due to home purchases.

However, the fact is that for many many years, the bulk of the mortgages was in the refinancing market.

Due to the low interest rates, many homeowners were refinancing and taking out cash. This cash was possibly used for putting additions on the houses, buying cars, paying off debt, possibly sending children to college. Who knows what they used it for, and frankly it’s none of our business what these homeowners used the money is for. But the fact is that the refinance market for many years was over 50% of all mortgages closed.

However, this has recently changed. In January 53% of the mortgages that were closed were used for home purchases. And by March that had risen to 63%.

The other interesting item is that mortgages are taking less time to close. In January the average mortgage closed in only 51 days. By March, it was down to 43 days. So not only are more people buying homes as the rise in the percentages of home purchase mortgages shows, but these loans are also closing quicker, which allows the houses to go through the selling process at a quicker rate.